The Reserve Bank of India (RBI) has issued a Gazette Notification amending the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, allowing Indian banks to extend loans in Indian Rupees to banks or individuals residing in Sri Lanka, Bhutan, and Nepal.
Following this amendment, Indian banks and their overseas branches are now permitted to lend in Indian Rupees to any bank or person resident in Bhutan, Nepal, or Sri Lanka.
In a statement, the High Commission of India in Colombo said the new regulation would enhance credit accessibility for Sri Lankan businesses, noting that the ability to borrow in Indian Rupees would minimize exchange rate risks and strengthen cross-border trade and financial cooperation between India and Sri Lanka.
